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Summer is here and the spending is uneasy

As August begins, everything is heating up at the shore except sales.

Reacting to reports that Americans spent less at retail businesses for a third consecutive month in June, marking the worst three-month period since the fall of 2008, many southern New Jersey business owners said this week that while times aren’t as bad as they were during the height of the financial crisis, they aren’t good either.

Among the hardest hit are food businesses, where limited discretionary income often dictates meals made at home rather than ordered out. In fact, the only retailers nationwide to report higher sales, although their increases were small, were grocery, liquor and clothing sellers.

Locally, most business owners agreed sales weren’t measuring up to last year, and some said they weren’t measuring up to prior lean years.

“It’s not better than 2008,” said Ken Merritt, partner for more than 20 years in Blitz’s Markets in Cape May Court House, Sea Isle City, Villas and North Wildwood, speaking of the economy in general. “It’s much worse than 2008.”

In fact, Merritt said that anyone in the restaurant, food or deli business isn’t being honest if they say otherwise because his conversations with vendors and salespeople indicate those sectors are off 25 percent.

But Jody Mallon, in her 24th year as owner of Mallon’s Homemade Sticky Buns with three locations in Ocean City and one each in Sea Isle City and Avalon, said this summer isn’t as bleak as four years ago.

“Are times a little tough? Yes,” she said. “Are they as bad as 2008? No. The rate of growth has slowed down and you have to work a lot harder for that little bit.”

Kristen Swamer, who has managed two of the three Blitz’s Markets in Ocean City for the last four years, said, “This year is definitely down, but 2008 was probably our worst year.”

Both Mallon and Swamer said customers are carefully considering purchases before parting with their money, not a hopeful sign when the items in question cost less than $8.

“Do I think people are watching their money? Yes. I see bodies coming to the shore but they’re not spending,” said Mallon, whose bakery charges $7.75 for a half-dozen buns. “Look at all the people walking on the boardwalk but they’re not carrying bags. They’re not buying. People are being real careful. It’s not as bad as 2008, not at all, because people were really scared then.”

“We raised our hoagie prices from $6.99 to $7.99 this year, and we noticed a lot of people stopped coming,” Swamer said of the South Seaville store. To regain those mainland customers, she said, “We had to reduce the price.”

Also, she said, it was necessary to shave 30 hours off the South Seaville store’s payroll because the location was not producing sufficient revenue to justify previous levels of staffing.

“It’s a recession, business is going to be down,” Merritt said. “I don’t see any growth anywhere.”

He disagreed with the popular belief that the shore, because it is a vacation destination, is somewhat insulated from what is happening nationwide.

“It’s exactly the same here as it is across the country,” he said.

Observers agree with him. Bank employees say they are accepting smaller deposits into business accounts, and that they are hearing most merchants report that business plunged off a cliff since July 4.

“It died,” Swamer said. “It went from really busy to nothing.”

Kathy Sykes, an Ocean City School District employee, said she took out-of-state visitors to Gillian’s Wonderland in the second week of July and was surprised at the lack of lines. “I don’t remember it being that way years ago,” she said.

Merritt said the availability of parking everywhere during the week is another indication that things aren’t as busy at the shore.

“We’re busy Friday night and all day Saturday, and on Sunday, they all leave,” he said.

Other merchants, speaking on condition of anonymity, agreed that weekends were strong but weekday business was weak. Some reported weekday sales figures off as much as 50 percent from last year, which means anywhere from hundreds to thousands of dollars a day less in the till.

Anecdotal evidence shows that even venerable Ocean City icons such as Johnson’s Popcorn and the Original Fudge Kitchen are seeing fewer visitors and transacting fewer sales these days.

While many merchants are struggling, Jim Hennessy, a merchant in one of the few retail categories nationwide to show growth in the last quarter, is pleased so far with the summer of 2012. He said sales at Heritage Surf & Sport, a 50-year-old business with two locations in Ocean City and one each in Margate and Sea Isle City, are “up quite a bit.”

“It’s a wonderful year for us,” he said. “People are spending more money. They’re much more relaxed about their spending and the economy.”

Heritage owes its success to carrying the right product and having its finger on the pulse of the demographic that frequents the shops, said Hennessy, adding that brand awareness is key among young shoppers.

Even with nothing but good news to report, Hennessy said he doubts the free-spending days prior to the economic collapse of 2008 will make a comeback.

“This is what I call the new normal,” he said. “I don’t think the normal we knew will ever return.”

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